Congress plays chicken as shutdown looms

WASHINGTON - What looked last week like a game of political hot potato has become a high-stakes game of chicken, with continued operation of the federal government and possible wider impact on the overall economy hanging in the balance.

In a move that makes a shutdown appear very likely, House Republicans approved a spending plan early Sunday morning that would delay the Affordable Care Act for a year and repeal its tax on medical devices.

The temporary budget resolution now goes back to the Senate, where Democrats have consistently said any changes to President Barack Obama's signature health care law would be a deal-killer.

On top of that, Obama has already issued a veto threat.

If Washington can't reach a deal, a government shutdown will begin at 12:01 a.m. Tuesday.

A Senate Democratic source told CNN on Saturday there were no plans for the Senate to meet before Monday -- the day the current fiscal year ends.

Congress could avert a shutdown by passing a temporary spending measure while the two chambers work out their differences.

House GOP leaders defiant

As the countdown to a shutdown marched on, House Republican leaders remained defiant Sunday in their effort to chip away at the Affordable Care Act.

"If the Senate stalls until Monday afternoon instead of working today, it would be an act of breathtaking arrogance by the Senate Democratic leadership," House Speaker John Boehner said Sunday in a written statement. Boehner added, "I call on the Democratic leaders of the Senate to act today on the measure passed by the House last night."

House Majority Whip Kevin McCarthy, R-California, one of Boehner's top lieutenants, said Sunday that if the Senate rejects the latest House bill, House Republicans will send the Senate another bill that both funds the government and contains provisions regarding the Affordable Care Act.

"I think the House will get back together -- in enough time -- send another provision, not to shut the government down, but to fund it," McCarthy said on "Fox News Sunday," "and it will have other options in there (about the Affordable Care Act) for the Senate to look at again."

"We are not shutting the government down," McCarthy insisted when asked whether he was willing to risk the first shutdown of the federal government since 1996. "While the president was out golfing (Saturday) and the senators went home, we were here working till 1 a.m. to make sure we didn't shut the government down, that we put a funding bill across."

Asked whether the House would consider passing a funding bill without any provisions regarding the Affordable Care Act and with votes from House Democrats, McCarthy would not commit to that course of action and, instead, said again that the next bill the House passes will address the Affordable Care Act in some way.

McCarthy did, however, leave open the possibility of a stopgap funding measure that funded the federal government for a few days in order to avoid a shutdown.

"We will not shut the government down," McCarthy said. "If we have to negotiate a little longer, we will continue to negotiate."

"We do not want to shut the government down," McCarthy added.

Boehner's and McCarthy's efforts to highlight House GOP efforts to avoid a shutdown by working late into the night Saturday were echoed by Rep. Cathy McMorris Rodgers, chairwoman of the House GOP Conference.

"We were there almost till midnight last night, working on the bill, passing the bill, got even some Democrat support in the House, and yet the Senate won't even come back today," McMorris Rodgers said Sunday on CNN's "State of the Union."

"They're the ones playing games," she continued. "They need to act. They're the ones that are truly threatening a government shutdown by not being here and acting."

Dem on House GOP: 'These people have come unhinged'

On the Democratic side, Rep. Debbie Wasserman Schultz, D-Florida, continued to insist that Republicans stop their effort to link continued funding of the government or raising the debt ceiling to repealing, delaying, or modifying Obamacare.

"I hope (the current stalemate) ends with cooler heads prevailing on the Republican side of the aisle," the chairwoman of the Democratic National Committee said on CNN's "State of the Union."

The Florida Democrat compared the Republican strategy -- linking funds for the government with changes and delays to the health care law -- to holding the economy hostage and playing chicken with the country's economic stability.

"That's totally and wholly irresponsible," she said of the GOP's strategy.

"Would you," Wasserman Schultz added, "if you didn't like the redesign of your kitchen -- would you burn the whole house down? Or would you try to make modifications to the kitchen? These people have come unhinged."

The Democrat said that once the threat of the government shutdown was taken off the table, her party and Republicans should work together to ensure smooth implementation of the Affordable Care Act.

Going after the tax

The decision to vote on the House amendments overnight emerged from a rare weekend GOP caucus meeting called by House Speaker John Boehner. The votes, taken after midnight, were 231-192 for the Affordable Care Act delay, and 248-174 for the medical device tax repeal, mostly along party lines.

Two Democrats broke rank and voted for the Obamacare delay: Mike McIntyre of North Carolina and Jim Matheson of Utah.

Seventeen Democrats voted for the tax repeal.

Meanwhile, a bill to guarantee pay for military personnel during any shutdown passed 423-0.

House Republicans had said they wanted to stop as much of the president's health law as possible. The medical device tax is one of the more controversial taxes in the law, with Republicans saying it sends jobs overseas.

Democrats, particularly those from states or districts with medical device manufacturers, have spoken out against the tax.

"Republicans have pointed out over and over (Saturday) that many Democrats in the Senate are already on record voting for this repeal," said Dana Bash, CNN's chief congressional correspondent. "So that's why they're trying to put Democrats there in a box."

"But we're already being told by Democratic sources in the Senate that they feel they're going to keep all of their senators in line," she said.

Senate Majority Leader Harry Reid called the Republican strategy "pointless" and said the Democratic-led Senate would reject the GOP alternatives. The White House said Obama would veto the House proposal if it reached his desk.

A separate White House statement said voting for the GOP measure "is voting for a shutdown."

Partisan back and forth

The back and forth over the spending plan -- called a continuing resolution in legislative jargon -- began when House Republicans stripped all funding for the Affordable Care Act from their original version and sent it to the Senate.

The Senate, where Democrats hold a slim majority, restored the funding on Friday and kicked the plan back to the House.

On Saturday, Boehner convened his caucus to forge a counteroffer to the Senate changes.

House Republicans added an amendment that would fund the government until December, a month longer than the Senate version. They also added a "conscience clause" to the one-year delay amendment to allow employers and insurance plans to refuse to cover birth control.

In a sign that the House Republicans don't expect the Senate to accept their changes, House leaders held a separate vote to ensure that the military gets paid in the event of a government shutdown.

Officials estimate the military pay could be affected by a shutdown as soon as October 14, and the GOP move was considered a political gesture to shield the party from criticism that its brinksmanship could hurt U.S. fighting forces.

Shutdown looms

Reid previously warned that any changes to the Senate's version by the House would result in at least the start of a government shutdown because of the time it would take to reconsider the proposal.

Republican Rep. Michael Grimm of New York said Saturday a "slight" shutdown could occur due to the little time left to pass a short-term spending plan for the new fiscal year that starts Tuesday.

"I'm hoping no, but just look at the timing," Grimm said, laying out a scenario in which the political wrangling leads to last-minute deliberations on Monday and beyond.

The prospect of a government shutdown caused by GOP tactics irked the longest serving member of Congress in history, Democratic Rep. John Dingell of Michigan, who said in a statement that "this once-deliberative body has been taken over by knaves and know-nothings, content with putting partisan politics ahead of the American people."

Obama not backing down

Tea party conservatives want to halt the Affordable Care Act now, just as full implementation of its individual health care exchanges begins in the new fiscal year starting Tuesday.

More moderate Republicans, such as veteran Sens. John McCain of Arizona and John Cornyn of Texas, criticize the strategy of tying a government shutdown to undermining the health care reform law passed by Democrats in 2010 and upheld by the Supreme Court last year.

Obama said Friday that new exchanges for private health insurance under the reforms will open this week as scheduled -- even if there is a government shutdown.

"The House Republicans are so concerned with appeasing the tea party that they have threatened a government shutdown or worse unless I gut or repeal the Affordable Care Act," Obama said. "That's not going to happen."

Political fallout

Even if the government were to shut down, the Affordable Care Act would probably continue anyway. That's because most of the funding for Obamacare comes from new taxes and fees as well as from cost cuts to other programs like Medicare and other types of funding that carry on even in the event of a government shutdown.

Congress' research arm, the Congressional Research Service, prepared a memo for Republican Sen. Tom Coburn, R-Oklahoma, that suggested an effort to use the government shutdown as leverage to force Democrats to delay implementing the law would not really work because the law will continue regardless of a shutdown.

Plus, the law would still be in effect, so its many new requirements -- everything from forcing insurance companies to cover anyone who wants insurance, to requiring Americans to carry health insurance or pay a fine -- would still be in effect, too.

Republican leaders in both chambers don't want a shutdown now over the spending issue, for political and negotiating reasons.

They fear the optics of Republicans being blamed for a shutdown, and also want to exert as much leverage as possible for the GOP's agenda at the upcoming deadline to raise the federal debt limit.

The debt ceiling

The shutdown showdown comes a few weeks before another fiscal deadline -- the need to raise the nation's debt ceiling so the government can pay all its bills.

Treasury Secretary Jack Lew said last week the limit on how much the government can borrow must be increased by October 17 or the nation could be technically in default.

Analysts warn of severe economic impact from any doubt cast over whether the U.S. would meet its debt obligations. A similar bout of congressional brinksmanship over the debt ceiling in 2011 led to the first-ever downgrade of the U.S. credit rating.

Boehner faces the same rift in his caucus over the debt ceiling issue, with tea party conservatives pushing to undermine Obamacare and fulfill other Republican priorities in return for what Obama calls the responsibility of Congress to make sure America can pay its bills.

On Thursday, Boehner had to delay introducing a GOP debt ceiling plan after conservatives complained the proposed package failed to include enough budget cuts and significant changes to entitlement programs.

The initial proposal by House GOP leaders, which would raise the debt ceiling for a year, included a one-year delay of Obamacare, provisions to roll back regulations on businesses, tax reforms and approval of the Keystone XL oil pipeline.